Uranium Spot Price
As the world continues to develop a greener mentality the demand for nuclear power is increasing. Nations who have depended on fossil fuels are searching for alternate sources of energy and it seems the quickest solution rests on the shoulders of the element uranium. The spot price which is the open market price for the immediate delivery of uranium, is steadily increasing as the demand increases. The uranium market is on the verge of experiencing a bull market, which could last for at least three to five years.
Uranium is a natural occurring element that's found in rocks, water and the soil and is usually found combined with other elements. Several countries mine uranium. Canada, Australia, Kazakhstan, Niger, Russia, Namibia, China, Uzbekistan and the United States have the ability to produce around 40,000 tons a year. At that consumption rate there is a 100 year supply, but there is an unlimited amount of uranium waiting to be discovered. There's about 4.6 billion tons of uranium in sea water, which can be extracted using ion exchangers. Australia currently has the largest uranium ore reserves as well as the largest single deposit of uranium, which is located in the Southern part of the country.
The dollars spent to develop future uranium sources has been increasing steadily over the last four years and should reach over a billion dollars a year by 2012. The spike in the spot price of uranium is directly related to the quality of uranium that is being mined. Although mines around the world are producing more uranium, the amount of isotope uranium-235 used to produce nuclear power is less abundant then isotopes uranium-233, uranium-238 and 234. Isotope uranium-235 is the only isotope in nature than can be separated by thermal neutrons.
The 2009 worldwide demand for uranium is over 180 million pounds and the production is 125 million pounds. That means the spot price of uranium could increase by as much as 35% in 2010, especially when Western Europe and Asia needs are considered. Another factor which is having an impact on the spot price of uranium is mining company's business strategies and goals. Companies who are known for producing quality uranium are limited and there could be a consolidation of companies within the next year, which will definitely have an effect on the spot price.
At the end of 2005 the spot price of uranium was $36.50 a pound, today it is $45 a pound and that price will increase to over $70 a pound in the next year due to a rebound from the current global financial crisis, as well as increasing demand. There are 44 new nuclear reactors under construction and there are 110 more in the planning stage, plus 272 more reactors are being planned by nations around the world.
United States uranium miners have closed several mining operations due to a large amount of debt, but should be able to reopen as market conditions change. Those mining operations are looking for long-term contracts instead of spot transactions in order to increase profits and that strategy is beginning to pay-off. Countries like South Korea are investing in U.S. uranium mines, as well as committing to long-term supply contracts to fuel the power plants that produce half of Korea's electricity needs.
There are a number of reasons for the growth of nuclear power and the demand for uranium, but the main reason is not only environmental concerns, but worldwide population growth especially in Southeast Asia, Africa and the Middle East. The world needs to develop more cost efficient fuel sources and at the moment nuclear power and uranium are the current answer to this worldwide dilemma.